Fortress Transportation and Infrastructure Investors (NASDAQ:FTAI) Is Due To Pay A Dividend Of US$0.33
Fortress Transportation and Infrastructure Investors LLC (NASDAQ:FTAI) will pay a dividend of US£0.33 on the 24th of May. This makes the dividend yield 6.3%, which will augment investor returns quite nicely. Check out our latest analysis for Fortress Transportation and Infrastructure Investors
Fortress Transportation and Infrastructure Investors’ Distributions May Be Difficult To Sustain
If the payments aren’t sustainable, a high yield for a few years won’t matter that much.
Even though Fortress Transportation and Infrastructure Investors is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend. Analysts expect the EPS to grow by 71.7% over the next 12 months.
While it is good to see income moving in the right direction, it still looks like the company won’t achieve profitability. Unless this happens fairly soon, the dividend could start to come under pressure.
Fortress Transportation and Infrastructure Investors Doesn’t Have A Long Payment History
The dividend’s track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The payments haven’t really changed that much since 7 years ago.
It’s good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn’t want to depend on this dividend too heavily.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Let’s not jump to conclusions as things might not be as good as they appear on the surface.
Fortress Transportation and Infrastructure Investors’ EPS has fallen by approximately 45% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn’t be feeling too comfortable.
The company has also been raising capital by issuing stock equal to 16% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus – perpetually pushing a boulder uphill.
Companies that consistently issue new shares are often suboptimal from a dividend perspective.
Fortress Transportation and Infrastructure Investors’ Dividend Doesn’t Look Great
Overall, this isn’t a great candidate as an income investment, even though the dividend was stable this year. The company seems to be stretching itself a bit to make such big payments, but it doesn’t appear they can be consistent over time. Overall, this doesn’t get us very excited from an income standpoint.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Fortress Transportation and Infrastructure Investors has 4 warning signs (and 2 which don’t sit too well with us) we think you should know about.
Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers. Have feedback on this article?
Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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